- Nintendo posted a drop in profit and revenue for its fiscal year due to falling sales of its flagship Switch console.
- The Japanese gaming giant sold 17.97 million units of its flagship Nintendo Switch console series.
- In the fiscal year ending March 2024, Nintendo is forecasting sales of 15 million units of the Switch.
Nintendo is hoping that major games like Mario and Zelda will help keep interest in its aging Switch console series.
Charlie Tribalev | AFP | Good pictures
Nintendo posted a drop in profit and revenue for its fiscal year due to falling sales of its flagship Switch console.
For its full fiscal year, which begins in April 2022 and ended March 31 this year, Nintendo met its own forecast and posted revenue of 1.6 trillion yen. This is a decline of 5.5% per annum.
Nintendo posted 432.7 billion yen in net profit for the fiscal year, down more than 9% year-over-year. However, this was better than the company’s own estimate of ¥370 billion.
The Japanese gaming giant sold 17.97 million units of its flagship Nintendo Switch console series, in line with its own forecast of 18 million units for the fiscal year. That compares to more than 23 million Switch units sold in the fiscal year ending March 2022, a 22% decline.
Nintendo said that “shortages of semiconductors and other components affected production until the end of the summer” and that the company “did not experience growth in sales, mainly during the holiday season.”
In the fiscal year ending March 2024, Nintendo is forecasting sales of 15 million units of the Switch.
Nintendo is competing with the aging console with the Switch, which has been on the market for six years, with investors fearing that its sales may have peaked. The company was forced to lower its forecast for Switch sales twice last fiscal year after a disappointing holiday season.
During the Switch’s lifetime, Nintendo tried to update the console with a handheld version and an improved screen. This helped in the short term, but did little to stem the overall trend of declining sales.
In contrast, rival Sony posted its highest ever profit for the year ended March 31. Sony’s PlayStation 5 has only been on sale for a little over two years, so it’s still in its infancy.
Nintendo shares are up 3.6% this year, while Sony’s is up 25%.
“Nintendo Switch has had an amazing run, but is definitely past its peak,” Serkan Toto, CEO of Kanton Games, a Tokyo-based games consultancy, told CNBC.
“Based on the forecast for the new fiscal (year), I don’t expect any miracles, but rather a company running on autopilot and fulfilling its commitment to existing Switch users. Every console cycle eventually ends, and Nintendo, too, now needs new hardware to revive its sales.”
The bottom line for Nintendo is how it continues to generate revenue from its 114 million annual paying users. The gaming company has a wide variety of games and recognizable characters, from Pokemon to Mario.
However, Nintendo said software sales fell 9% year over year to 213.96 million units in the year ended March 31.
Nintendo is set to release The Legend of Zelda: Tears of the Kingdom on Friday, one of its most popular franchises.
The company has forecast software sales of 180 million units in the current fiscal year.
Nintendo expects net profit to fall 21.4% to 340 billion yen in the year ending March 2024.